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means testing is super unfair to those who sacrificed lifestyle in their youth to save for retirement. Consider the person that could have, but didnt, live a l

means testing is super unfair to those who sacrificed lifestyle in their youth to save for retirement. Consider the person that could have, but didnt, live a lavish lifestyle and instead responsibly saved. Then a benefit (which they paid into, and maybe rely upon) is removed after the fact? Bad news.

ryandrake 8y ago
Unfairness is arguably in the eye of the beholder. If someone “responsibly saved” then they are not relying on the benefit as much as someone who didn’t or couldn’t save. Is it fair that a person who does not need financial aid receives it anyway?
- kingbirdy 8y ago
  But this then incentivizes people to not save and spend their money while young instead, on the assumption that social security will help them when they're old, leading to even larger burdens on the system.
encoderer 8y ago
Social Security is not a retirement account. We're paying today for the current generation of retirees so we don't have a class of elderly homeless eating cat food and dying in our streets. Means testing is consistent with this outcome.
- craftyguy 8y ago
  > so we don't have a class of elderly homeless eating cat food and dying in our streets. Too bad we already do, and the number seems to be increasing rapidly: https://www.nytimes.com/2016/05/31/us/americas-aging-homeless-old-and-on-the-street.html https://www.nytimes.com/2016/05/31/us/americas-aging-homeles... So if Social Security isn't helping with that, what other excuses are there?
  - allthenews 8y ago
    The fact that elderly homeless people exist does not imply that current social security policy does nothing. Presumably, if we did away with SS, there would be more on the streets.
- roenxi 8y ago
  Incentives are much more powerful than intent. It isn't meaningful to talk about intent when assessing the likely outcome of an economic initiative. I can't emphasise this as strongly as I'd like to; in economics we want fairness and the incentives to align, but if they are not going to then incentives trump fairness. Fairness with poor incentives drives bad outcomes, and usually reveals that 'fairness' is 'fairness for some in groups, at the expense of the rest'. Resources are no longer growing as quickly relative to population as they were in the 70s and 80s. We need normal people to make uncomfortable decisions _not_ to consume. Otherwise there are not enough resources when they grow old. Incentivising spending in the present is not a clever idea, even if it isn't intended.
- prklmn 8y ago
  Means testing gets you nowhere because there are so few people who would qualify as too rich- it would be less than a drop in the bucket "saved." It would be purely symbolic, and it's another way for those in power to say that we punish the rich and social security is a wealth transfer to the poor, then use that as a reason to abolish it. The idea of means testing is totally counterproductive to your goal. Also as an aside, there are wealthy elderly people already not cashing their social security checks, you just don't know it because it makes nearly no difference in the scheme of things.
  - encoderer 8y ago
    Probably true, though separate from the argument that means testing is "unfair".
- coredog64 8y ago
  One of the problems with means testing is that as the average payout declines, so too does support for the program. Without broad support, cuts/changes to SS become less of a third-rail problem.
jhayward 8y ago
The marginal value of each dollar of social security benefit is smaller for those with independent wealth. Means testing is a way of making sure that each SSI dollar is highly valued.
arebop 8y ago
If it's not a hard cutoff as suggested upthread but just a progressive phaseout then the responsible person still has a reward and yet the benefits can be focused on the needy. I'm a proponent of BI but I have to point out that means-testing doesn't imply perverse incentives.
krapp 8y ago
>Consider the person that could have, but didnt, live a lavish lifestyle and instead responsibly saved. Then a benefit (which they paid into, and maybe rely upon) is removed after the fact? Bad news. Such a person wouldn't be able to live a "lavish lifestyle" with the benefits alone - that's not what they're for. And if they saved up throughout their entire life then they wouldn't depend on those benefits in the first place, and could likely live far more lavishly than the average recipient, anyway.
- maerF0x0 8y ago
  If I am paying into SS in my 20s and expect to get, say, $1000 per month in my 60s, and I responsibly design my 401k savings etc around that promise, and then have it taken away because I saved more than the average person then I will have a $1000 hole in my budget . Itd be no different than a bank keeping the contents of my savings account and giving me the excuse "we changed the rules"
  - krapp 8y ago
    Except Social Security isn't a bank account, nor is it really a "promise," at least not a promise of a specific return on investment. One could argue that designing your financial expectations around that program remaining exactly as is for the forseeable future given that history wouldn't be reasonable - any number of events could lead to that $1000 hole in your budget. Who's "keeping your savings" when stocks fall or inflation rises? But, if the feasibility of the Social Security program as a whole depends on restructuring the program, as it has in the past, then I believe it's better for society that those cuts be distributed to those who can best afford them.

ryandrake 8y ago

Unfairness is arguably in the eye of the beholder. If someone “responsibly saved” then they are not relying on the benefit as much as someone who didn’t or couldn’t save. Is it fair that a person who does not need financial aid receives it anyway?

kingbirdy 8y ago
But this then incentivizes people to not save and spend their money while young instead, on the assumption that social security will help them when they're old, leading to even larger burdens on the system.

encoderer 8y ago

Social Security is not a retirement account. We're paying today for the current generation of retirees so we don't have a class of elderly homeless eating cat food and dying in our streets. Means testing is consistent with this outcome.

craftyguy 8y ago
> so we don't have a class of elderly homeless eating cat food and dying in our streets. Too bad we already do, and the number seems to be increasing rapidly: https://www.nytimes.com/2016/05/31/us/americas-aging-homeless-old-and-on-the-street.html https://www.nytimes.com/2016/05/31/us/americas-aging-homeles... So if Social Security isn't helping with that, what other excuses are there?
- allthenews 8y ago
  The fact that elderly homeless people exist does not imply that current social security policy does nothing. Presumably, if we did away with SS, there would be more on the streets.
roenxi 8y ago
Incentives are much more powerful than intent. It isn't meaningful to talk about intent when assessing the likely outcome of an economic initiative. I can't emphasise this as strongly as I'd like to; in economics we want fairness and the incentives to align, but if they are not going to then incentives trump fairness. Fairness with poor incentives drives bad outcomes, and usually reveals that 'fairness' is 'fairness for some in groups, at the expense of the rest'. Resources are no longer growing as quickly relative to population as they were in the 70s and 80s. We need normal people to make uncomfortable decisions _not_ to consume. Otherwise there are not enough resources when they grow old. Incentivising spending in the present is not a clever idea, even if it isn't intended.
prklmn 8y ago
Means testing gets you nowhere because there are so few people who would qualify as too rich- it would be less than a drop in the bucket "saved." It would be purely symbolic, and it's another way for those in power to say that we punish the rich and social security is a wealth transfer to the poor, then use that as a reason to abolish it. The idea of means testing is totally counterproductive to your goal. Also as an aside, there are wealthy elderly people already not cashing their social security checks, you just don't know it because it makes nearly no difference in the scheme of things.
- encoderer 8y ago
  Probably true, though separate from the argument that means testing is "unfair".
coredog64 8y ago
One of the problems with means testing is that as the average payout declines, so too does support for the program. Without broad support, cuts/changes to SS become less of a third-rail problem.

jhayward 8y ago

The marginal value of each dollar of social security benefit is smaller for those with independent wealth. Means testing is a way of making sure that each SSI dollar is highly valued.

arebop 8y ago

If it's not a hard cutoff as suggested upthread but just a progressive phaseout then the responsible person still has a reward and yet the benefits can be focused on the needy. I'm a proponent of BI but I have to point out that means-testing doesn't imply perverse incentives.

krapp 8y ago

>Consider the person that could have, but didnt, live a lavish lifestyle and instead responsibly saved. Then a benefit (which they paid into, and maybe rely upon) is removed after the fact? Bad news. Such a person wouldn't be able to live a "lavish lifestyle" with the benefits alone - that's not what they're for. And if they saved up throughout their entire life then they wouldn't depend on those benefits in the first place, and could likely live far more lavishly than the average recipient, anyway.

maerF0x0 8y ago
If I am paying into SS in my 20s and expect to get, say, $1000 per month in my 60s, and I responsibly design my 401k savings etc around that promise, and then have it taken away because I saved more than the average person then I will have a $1000 hole in my budget . Itd be no different than a bank keeping the contents of my savings account and giving me the excuse "we changed the rules"
- krapp 8y ago
  Except Social Security isn't a bank account, nor is it really a "promise," at least not a promise of a specific return on investment. One could argue that designing your financial expectations around that program remaining exactly as is for the forseeable future given that history wouldn't be reasonable - any number of events could lead to that $1000 hole in your budget. Who's "keeping your savings" when stocks fall or inflation rises? But, if the feasibility of the Social Security program as a whole depends on restructuring the program, as it has in the past, then I believe it's better for society that those cuts be distributed to those who can best afford them.